• 135 million ordinary shares of Star City Holdings, representing 24.6% of the outstanding shares of Star City Holdings;
• Options to purchase an additional 37 million ordinary shares of Star City Holdings;
• The company that owns 85 percent of the company that owns the management contract for the Star City Casino.

• Approximately 110 million ordinary shares of  Star City Holdings at A$1.60 (approx. US$1.03) per share;
• Harrah's interest in the Star City management contract for A$204 (approx. US$131) million;
• A portion of Harrah's options to purchase additional ordinary shares at a per option price based on the A$1.60 per share offer.

Harrah's plans to sell its remaining Star City shares and options not purchased directly by TABCORP for cash or through tenders into TABCORP's offers. TABCORP will offer to acquire all of the remaining ordinary and preferred shares of Star City, other than those acquired from Harrah's, for A$1.70 per share in TABCORP stock and cash. The TABCORP offer is conditional upon TABCORP receiving regulatory approval.

Harrah's plans to use the total after-tax proceeds of the sales, estimated at approximately US$220 million, to reduce debt. Closing of the transaction is expected in the latter half of 1999.

In addition to the purchase arrangements detailed above, TABCORP has agreed to contract with Harrah's for certain services for which TABCORP will pay Harrah's approximately A$7 (approx. US$4.5) million annually for three years. In certain circumstances, the amount could be increased to A$10 (approx. US$6.43) million annually.

Ross Wilson, Managing Director and Chief Executive Officer of TABCORP Holdings, stated, "The retention of Harrah's for certain services is an important piece of our overall tender to acquire Star City. Through the services agreement, we will ensure that this casino project maintains the continuity of Harrah's expertise as we continue to build Star City into a world class casino and entertainment facility."

Philip G. Satre, Chairman and Chief Executive Officer of Harrah's stated, "This transaction is a positive proposal for each party involved. Star City is becoming recognized as one of the world's most renowned casino entertainment properties. By aligning shareholders and management through TABCORP, Star City is positioned, both financially and operationally, for continued success."

Mr. Satre continued, "At Harrah's we have carefully considered the strategic fit of the Star City asset into our operating model and multi-market customer base. We have determined that it is in the best, long-term interest of Harrah's shareholders for us to monetize these assets while retaining an operational role."

"The value offered by TABCORP is at a significant premium to the value we assigned to these assets in theacquisition of Showboat," stated Harrah's Chief Financial Officer Colin Reed. "The transaction is expected to be accretive to Harrah's earnings, and the repayment of debt will give us greater financial flexibility in the future."

Mr. Satre added, "I look forward to joining the Board of Directors of TABCORP and to ensuring a smooth transition for Star City Casino post the merger of Star City and TABCORP."

Aspects of the transaction are subject to certain approvals, including Australian regulatory approvals. Morgan Stanley and BT Wolfensohn acted as financial advisors to Harrah's for the transaction.

Harrah's Entertainment, Inc. is the most recognized and respected name in the casino entertainment industry operating 18 casinos in the United States under the Harrah's, Showboat and Rio brand names, and the Star City casino in Sydney, Australia. Founded more than 60 years ago, Harrah's is focused on building loyalty and brand value with its targeted customers through a unique combination of great service, excellent products, unsurpassed distribution, operational excellence and technology leadership.

Star City Holdings Limited owns the Star City Complex located in Sydney. The complex includes a casino and gaming facility, hotel facilities, theaters, conference and banquet facilities, restaurants and retail shops. TABCORP Holdings Limited is a public company based in Victoria, Australia. The Company will operate in excess of 15,000 gaming machines after its merger with Star City. It currently provides wagering and gaming services and facilities in Victoria through its wagering division. The wagering division sells totalizator bets on horse and greyhound racing and totalizator and fixed odd bets on sporting events offered through a network of retail and on-course outlets and by telephone. The gaming division also owns and operates gaming machines in Victorian hotels and clubs. For the six months ended December 31, 1998, TABCORP's net operating profit was A$71.5 million and the Company has a market capitalization of A$3.55 billion.
 
 

Star City is the premier entertainment 
destination in Sydney, Australia. 

Located in the high-tourist Sydney Harbor area, Star City is themed like a "mini-city" with retail stores, nine restaurants, a conference and banquet center, theaters, nightclubs and a large 153,000 square foot casino. The Five-Star, 470-room hotel offers terrific views of the harbor and city skyline and is within walking distance of the central business district and main tourist attractions.

The 24-hour casino action centers around 1500 slot machines and 200 gaming tables, plus a TAB. Games played on the tables are Pai Gow, Sic Bo, Black Jack, Baccaret, Craps, Roulette and Two-up. There are non-stop sports telecasts in Trophies, Star City�s sports bar. Star City�s nine restaurants feature everything from gourmet to buffet. The Astral restaurant specializes in a modern Australian menu and features a good selection of Australian and French wines. The Endeavour Room has a high-class and personal atmosphere in an Arabian themed room featuring Islamic/Moroccan architecture. Steak and seafood lovers enjoy Pyrmont�s while those craving high-quality authentic Chinese cuisine visit the Lotus Pond restaurant or Al Porto for traditional, classical Italian. For those who are really hungry, the Garden Buffet is open for breakfast, lunch and dinner. Trophies pizza and fast food restaurant, and the Life Savers Brasserie are for those hungry folks looking for great food that is quick and convenient. Finally, Star is a special lounge for premium slot players that offers unparalleled Four-Star service.

Statements in this release concerning future events, future performance and business prospects, including the anticipated closing of the transaction and future earnings performance, are forward-looking and are subject to certain risks and uncertainties. These include, but are not limited to, economic, bank, equity and debt market conditions, changes in laws or regulations, third party relations and approvals, decisions of courts, regulators and governmental bodies, factors affecting leverage, including interest rates, ability to consummate the proposed transactions, and effects of competition. These risks and uncertainties could significantly affect anticipated results or events in the future and actual results may differ materially from any forward-looking statements. For additional information, refer to the section entitled "Private Securities Litigation Reform Act" in the Company's Form 10-K filed with the Securities and Exchange Commission for the period ended December 31, 1998.